[The Decline of Movie Theaters] "From New Releases to Live Concert Broadcasts" OTTs Swallowing Theaters

["I haven't been to the movie theater in a long time. New movies are released quickly anyway. So, why bother?" On the smartphone of Byeon Ji-hyun, a worker in her 30s, there are four online video service (OTT) applications installed. Enjoying watching movies and dramas regularly, Byeon currently subscribes to four OTT platforms simultaneously: Netflix, Wavve, Watcha, and TVING. She said, "I'm looking forward to the movie 'Seobok' premiering simultaneously on TVING next month," adding, "Even after COVID-19 ends, I don't plan to go to movie theaters for a while."]

◇From Movies to Performances and Sports Broadcasts... Watching on OTT

According to industry sources on the 23rd, CJ ENM's decision to simultaneously release the highly anticipated movie Seobok on its OTT platform TVING in the first half of the year is a representative example that confirms the changed status of OTT in the COVID-19 era.

The domestic OTT market has rapidly grown from 192.6 billion KRW in 2014 to 513.6 billion KRW in 2018, and 780.1 billion KRW last year, based on the increased smartphone penetration rate and ultra-high-speed networks. In particular, the spread of non-face-to-face (untact) services triggered by COVID-19 is evaluated as a catalyst for the OTT market's full-scale expansion. According to the Korea Communications Commission, the domestic OTT usage rate last year was 66.3%, up 14.3 percentage points from 52.0% the previous year. In other words, with the so-called stay-at-home demand surging, now 6 to 7 out of 10 people in the country use OTT services.

Previously, movies like "Time to Hunt" and "Space Sweepers," which postponed theatrical releases due to COVID-19, also chose OTT as their launching platform for the same reason. It is no longer surprising news that popular TV dramas and variety shows, as well as new movies, are released simultaneously on OTT. This contrasts with 2017 when multiplex theaters boycotted the simultaneous release of the Netflix-invested movie "Okja."

The range of content handled by OTT is also expanding. A few years ago, TV programs such as dramas dominated, but now it is possible to watch new movies, classic and musical performances, and even live broadcasts of soccer matches. Wavve has been praised for opening the "classic untact viewing era" by presenting performances by Lim Dong-hyuk and Richard Yongjae O'Neill through its "On: Classic" series with 5GX multiview. Coupang Play will broadcast live the Korea-Japan national soccer match on the 25th, following the matches of Son Heung-min, who is active in the Premier League. In other words, OTT is dominating the cultural platform in the stay-at-home era.

Jo Eun-young, a worker in her 30s who subscribes to Wavve and Watcha, said, "Perhaps because competition is fierce, the range of content available on OTT is much wider than other media channels," adding, "That's why I no longer go to movie theaters or pay for VOD on IPTV like before."

This trend is confirmed not only domestically but also overseas. The industry is paying attention to the fact that a significant portion of paid OTT users are the digitally savvy MZ generation. As they continue to be the main long-term consumer group, it is analyzed that OTT platforms will continue to drive growth. Especially as COVID-19 prolongs, the trend of replacing offline theaters and performance venues is expected to become even more pronounced.

◇Netflix's Dominance... Negotiation Power Strengthens

As Netflix's dominance deepens in the domestic OTT platform industry, concerns are growing simultaneously about the competitiveness of domestic OTTs and the weakening negotiation power of content producers. Last month, Netflix's user count surpassed 10 million, growing 113% compared to January last year. This figure overwhelms Wavve (3.95 million) and TVING (2.65 million) during the same period. Ko Jung-min, a professor at Hongik University's Graduate School of Culture and Arts Management, pointed out that "once a platform stabilizes, it exercises negotiation power," highlighting the increasing dependence on Netflix.

The content production structure and revenue distribution structure have also changed. Netflix, which announced it will invest about 550 billion KRW in Korean content this year alone, proposes content production by guaranteeing profits through 100% production costs plus 10-20% production fees, and production companies are reluctantly accepting such proposals. Yoo Chang-seo, a member of the Korean Film Council, predicted, "Currently, only Netflix's original content in the Korean market applies the production fee method, but if global OTT companies like Disney Plus enter, the production fee method could become generalized."

Sung Dong-gyu, a professor in the Department of Media Communication at Chung-Ang University, emphasized, "The self-reliant approach of web dramas, which involve relatively low production costs, is not a long-term alternative," adding, "Co-producing content and distributing it only on domestic platforms is the only current alternative."

This content was produced with the assistance of AI translation services.